Project 24's joint procurement process

Key highlights

• Early start was essential: Getting a head start proved crucial in managing setbacks. P24 went from 2017 to 2024.
• Maintaining relationships: Establishing processes and realising opportunities to remain engaged and connected with project partners and stakeholders was key.
• Industry sounding was crucial: Ongoing consultations with industry from the beginning grounded expectations and shaped the process.
• Legislative and industry shifts: Tender was impacted by legislative (e.g., NSW Waste to Energy policy) and market changes.
• Unexpected challenges: P24 encountered disruptions due to COVID-19 and one council being put into administration.
• Comprehensive risk management: A collaborative approach to risk identification and embedding controls throughout the project allowed risks to be effectively managed.

Project overview

P24 was a joint procurement initiative seeking regional disposal and processing services for garbage, bulky waste clean up, recycling and FOGO. The participating councils included Camden, Campbelltown, Wingecarribee and Wollondilly. Liverpool Council was part of the original proposal but later withdrew. The project sought to encourage new technology and allowed for a range of options such as an energy from waste solution and FOGO processing. The participating councils had been operating under an existing regional disposal and processing contract, which began in 2009 and expired on June 1, 2024. Building on the success of the previous agreement, P24 leveraged the combined waste tonnages of the participating councils (totalling 200,000 tonnes from 400,000 residents) with the aim of attracting new technology and investment, negotiating improved outcomes and more economical pricing.

Key objectives established at the outset included: 

• Price certainty: establishing long-term, fixed pricing agreements to ensure stability for the councils' budgeting processes
• Processing and disposal security: guaranteeing reliable and consistent waste services to prevent disruptions and ensure continuous and efficient waste management
• Alignment with NSW policy and strategic objectives: in particular, the NSW 20-year Waste and Sustainable Materials Strategy, which was released during the course of the project
• Ability to adapt to change: incorporating flexibility into the procurement process to accommodate future changes in regulations, technology and market conditions
• Sustainable technology: emphasising the use of innovative technologies in waste management
• Maximising resource recovery: implementing strategies to reduce the volume of waste sent to landfill.

Project timeline

The initiative commenced in 2017 with a strict timeline to secure new contracts before the existing ones concluded in 2024.

Responding to change

The project started in 2017 through high-level conversations with key industry players. Consistent communication with industry was essential for success.

The project faced significant waste policy and legislation challenges that went on to impact the tender outcome and added up to 12 months to the timeline, these challenges included:

1. uncertainty in NSW government waste policy, specifically government signalling to mandate FOGO collections
2. waiting for the release of the Waste and Sustainable Materials Strategy
3. changes to the Energy from Waste (EfW) policy mid-way through the project, reducing the options for residual waste disposal – the new policy restricted energy from waste facilities to certain precincts outside of the Sydney Metropolitan Area.

Additionally, the international acquisition of Suez by Veolia caused further postponements to the Request for Tenders (RFT) submission date and meant the councils had to extend the tender period.

Through industry soundings, it became clear that there was insufficient regional infrastructure for processing the FOGO stream. This prompted the councils to opt for a shorter 5-year contract term to ensure service certainty, anticipating that additional FOGO processing options would become available for future tenders. This decision gave industry time to develop the required infrastructure. In 2022, the tender closed. After the evaluation, a recommendation was presented to participating councils in November 2023.

Planning for success

Early and detailed planning helped to achieve the successful execution of this joint procurement project. Some of the initiatives undertaken in the planning stage include:

• Early engagement with industry experts was crucial to ensure current market insights were captured in the project brief, making the project viable and capable of achieving goals for both the councils and industry. Engaging the industry from the beginning was essential, recognising their long lead times for developing new technology and constructing infrastructure.
• A contract options analysis report was developed that discussed the approach to procurement to help gauge interest from council executives.
• A Memorandum of Understanding (MOU) was developed between the councils, outlining objectives, project coordination and the shared intention to collaborate effectively. The lead procurement responsibilities were shared between Camden and Campbelltown, with Campbelltown managing the tender submissions. This collaboration not only distributed workloads, but also highlighted the benefits of joint procurement.
• The previous contract model was used as a base for future requirements.
• Technical experts were used to inform the project working group, which in turn updated the project control group as shown in the project structure diagram below.
  
  
• A project working group charter was developed that outlined membership, voting and non-voting members, purpose, stages and rules for resolutions or endorsement, and roles and responsibilities. Throughout the process, the councils, including councillors, general managers, and executives, were kept informed and involved at every stage.
• An ACCC application was lodged early in the process and granted a year later in 2019, with the authorisation amended in 2020. The amendment involved extending the period of authorisation for a further five years, which was based on industry feedback that waste processors wanted longer contracts to underwrite investment in new processing facilities.
• Consultants were engaged in 2019 to manage the tender development and process, a probity advisor to guide the market approach, and a legal team for additional support.
• A detailed risk profile and register was essential for the success of the joint procurement initiative. Joint workshops were conducted with all four councils, addressing risks related to finance, legal, waste and planning. These workshops resulted in the creation of a comprehensive risk profile and assessment, which informed the development of embedded project controls. Some of the key risks identified included:
  • project execution and readiness:
    • location of facilities
    • facility availability - ensuring facilities are operational.
  • project timeline, including planning approval timeframes and delivery
    • council coordination and commitment
    • councils withdrawing from the project
  • differing priorities of the councils
    • the level of technical expertise within the council
    • project governance
  • external influences:
    • fluctuations and changes in the market conditions
    • market pricing and tolerance
    • advancement and changes in technology
    • changes in government policy and direction
    • compliance with changes to legislation
    • alignment with federal and state strategies.

• Engagement with federal and state governments was important. Both Treasury and the Department of Planning and Environment played pivotal roles in shaping the project's market offering and solution design leading up to the tendering phase. The project brief was released to industry, fostering an open dialogue through consultations with both state government and key industry participants. Releasing the tender documents to industry yielded valuable feedback that emphasised crucial elements such as:

  • longer-term contracts
  • guaranteed tonnages
  • contamination management
  • community education
  • equitable risk sharing
  • separate organics handling
  • alignment with the 20-year waste strategy
  • ensuring industry certainty.

This feedback was included in the final tender package that was released to market.

The tender was divided into three separable portions: Part A for Garbage, Part B for Recycling and Part C for Organics. Each part offered various contract length options. The request for tender documents was also structured to acknowledge the possibility of different service providers being responsible for each part.

Table 1: Breakdown of tender options

Options 2A and 2B are related to a service being implemented with or without a FOGO. This was separated as a FOGO service would impact the garbage and organics tonnages and composition depending on where the food waste ended up.

Procurement outcomes

• The tender resulted in no individual tenderer providing a preferred outcome for the group. The Councils resolved to ‘reject and negotiate.’ A report was prepared for each Council recommending the rejection of all tenders and intention to commence negotiations. This added a significant amount of additional burden and time.
• The negotiations were time-consuming. The entire process, from the initial Council report recommending rejection and renegotiation to the final Council report endorsing the outcome, spanning approximately 11 months. This timeline encompassed various administrative steps, including the preparation of reports and securing their placement on the meeting agendas of the respective councils. Additionally, coordinating the schedules of all four Council meetings proved difficult, as they did not align.
• This highlighted the importance of incorporating time for potential rejection and negotiation into the project schedule. It also underscored the need to develop protocols and plans for this scenario early on, ensuring they are ready to be implemented when needed.
• Each Council has an individual contract which is identical in structure with start and end dates synchronised, requiring only one contract manager across the 4 councils.
• Operating as a unified group empowered the councils to collectively negotiate with industry, significantly enhancing their influence over the outcomes.

The negotiated outcomes

• Part A (garbage and bulky waste): Both garbage and bulky waste are received and bulked up at Spring Farm, then:
  • garbage is transported (by Veolia) to Lucas Heights Landfill (which is managed by Cleanaway) for disposal
  • bulky waste is transferred by Veolia for processing off site.
• Part B (recycling) is sent to Spring Farm for processing.
• Part C (organics) is received and bulked up at Spring Farm and then transferred for processing. 
• FOGO was not part of the final outcome, however its inclusion in the provisions allows councils to work with service providers to investigate FOGO service options during the contract term or in the future.
• Veolia is the principal contractor for all services, excluding the disposal of garbage.
• A separate contract is in place with Cleanaway to receive and dispose of the waste.

To finalise the contract involved regular monthly meetings with executives. Although each council made independent decisions, the inclusion of General Managers in the working group proved immensely advantageous.

Challenges, solutions and tips